| Ghandhara Leasing Company Limited |
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| Annual
Report 1998 |
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| Contents |
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| Company
Information |
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| Notice
of Annual General Meeting |
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| FinanciaI
Highlights |
|
| Graphic
Presentation |
|
| Pattern
of Shareholding |
|
| Chairman's
Review |
|
| Directors'
Report |
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|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
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| Company
Information |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Raza Kuli Khan Khattak |
Chairman |
|
Nominee of GNL* |
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|
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| Mr.
Ahmed Kuli Khan Khattak |
|
Nominee of GNL |
|
| Mr.
Humayaun Sultan Mufti |
|
Nominee of GNL |
|
| Dr.
Adil Sultan Mufti |
|
|
Nominee of GNL |
|
| Mr.
Razi-ur-Rahman Khan |
|
Nominee of NIT |
|
| Mr.
Nasim Beg |
|
|
Nominee of NIT |
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| Mr.
Michio Kuwahara |
|
|
Nominee of Marubeni |
|
| Mr.
Mushtaq Ahmed Khan |
|
|
Nominee of Bibojee |
|
| Mr.
K.U. Rahman |
|
|
Nominee of Bibojee |
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| Mr.
A.G. Budhani |
|
|
Nominee of ICP |
|
| Mr.
Haroon A. Zuberi |
|
Chief Executive |
|
| *GNL:
Ghandhara Nissan Limited |
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|
| Acting
Company Secretary |
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|
Legal Advisors |
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| Mr.
Muhammad Tahir Salam |
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|
Shaukat Law Associates, |
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|
|
|
|
217, Central Hotel
Annexe, |
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| Registered
Office |
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|
Abdullah Haroon Road, |
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| 2nd
Floor, State Life Building, |
|
|
Karachi. |
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| 34,
The Mall, Peshawar Cantt. |
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|
Ph: 5681495, 5686223 |
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| Karachi
Office |
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|
Share Registrars |
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| l-D,
3rd Floor, Sunset Tower, |
|
THK Associates (Pvt) Ltd. |
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| Sunset
Boulevard, Karachi. |
|
Ground Floor, |
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| Ph:
5890751-5, |
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|
Shaikh Sultan Trust. |
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| Fax:
5888513, 5880687 |
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|
Building No, 2. |
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|
|
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|
Beaumont Road. |
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| Bankers
to the Company |
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|
Karachi-75530 |
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| American
Express Bank Ltd. |
|
Ph: 5686658, 5685687 |
|
| Allied
Bank of Pakistan Ltd. |
|
| National
Bank of Pakistan Ltd. |
|
| Standard
Chartered Bank |
|
| The
Bank of Tokyo |
|
| The
Bank of Khyber |
|
| The
Bank of Punjab |
|
|
| Auditors |
|
| Taseer
Hadi Khalid & Co, |
|
| Chartered
Accountants, |
|
| 1st Floor, |
|
| Shaikh
Sultan Trust, |
|
| Building
No, 2, |
|
| Beaumont
Road |
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| Karachi-75530 |
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| Ph:
5681912, 5682290, 5680934, 5671761-63 |
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| Notice
of Annual General Meeting |
|
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| Notice
is hereby given that the Seventh Annual General Meeting of the Company will
be held on 31st |
|
| December,
1998 at 2nd Floor, State Life Building, 34, The Mall, Peshawar Cantt.,
Peshawar at 12:00 |
|
| noon
to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
| -
To receive, consider and adopt the Audited Accounts of the company for the
year ended June |
|
| 30th
1998, together with the Directors' and Auditors' Report thereon. |
|
|
| -
To appoint Auditors and fix their remuneration. The present Auditors Messrs.
Taseer Hadi Khalid & |
|
| Co.,
Chartered Accountants, retire and being eligible, offer themselves for
re-appointment. |
|
|
| OTHER
BUSINESS |
|
| To
transact any other business as may be placed before the meeting with the
permission of the |
|
| Chairman. |
|
|
By Order of the Board |
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|
|
|
|
|
Muhammad Tahir Salam |
|
|
|
Acting Company |
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| Karachi:
9th December, 1998 |
|
Secretary |
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|
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| NOTES: |
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| 1.
The share transfer books of the company will remain closed from 29th
December, 1998 to 31st |
|
| December,
1998 (both days inclusive). |
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|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/her |
|
| proxy
to attend the meeting and vote for him/her. No person shall act as a proxy
who is not a |
|
| member
of the company. Proxies in order to be effective must be received by the
Company not |
|
| less
than 48 hours before the meeting. |
|
|
| 3.
Shareholders are requested to immediately notify the Company of any change in
their |
|
| addresses. |
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| Financial
Highlights |
|
|
|
|
30 June |
30 June |
30 June |
31 Dec |
31 Dec |
31 Dec |
|
|
|
1998 |
1997 |
1996 |
1994 |
1993 |
1992 |
|
|
|
|
(18 Months) |
|
|
| Balance
sheet (Rupees in million) |
|
| Net
Investment in Leases |
512.914 |
519.822 |
496.881 |
339.581 |
191.289 |
55.522 |
|
| Total
Equity |
|
147.942 |
172.530 |
160.771 |
72.886 |
66.552 |
55.162 |
|
| Total
Assets |
|
612.672 |
631.294 |
581.052 |
437.996 |
259.025 |
126.177 |
|
| Break-up
value (Amount in rupees) |
17.91 |
20.89 |
19.46 |
14.57 |
13.31 |
11.03 |
|
|
|
|
| Income
Statement (Rupees in million) |
|
| Gross
Income |
|
92.169 |
99.826 |
137.603 |
66.416 |
30.091 |
8.966 |
|
| Financial
charges |
|
72.709 |
67.343 |
87.670 |
37.514 |
11.710 |
0.364 |
|
| Other
expenses |
|
41.297 |
16.128 |
26.312 |
12.087 |
6.850 |
3.440 |
|
| Net
(Loss)/Profit |
|
(24.588) |
11.759 |
22.932 |
16.315 |
11.390 |
5.162 |
|
|
| Lease
portfolio (Percentage) |
|
| Plant
& Machinery |
|
56.96 |
73.10 |
66.33 |
77.00 |
78.60 |
74.00 |
|
| Equipment |
|
9.20 |
10.31 |
9.23 |
11.50 |
9.20 |
10.80 |
|
| Private
vehicles |
|
8.79 |
7.05 |
9.67 |
11.00 |
9.40 |
8.10 |
|
| Commercial
vehicles |
|
25.05 |
9.54 |
14.77 |
0.50 |
2.80 |
7.10 |
|
|
|
|
|
|
|
|
|
|
|
| Pattern
of Shareholding |
|
|
| No. of |
Shareholding |
Total |
|
|
| Shareholders |
From |
To |
shares held |
|
|
| 83 |
1 |
100 |
8,300 |
|
|
| 395 |
101 |
500 |
173,300 |
|
|
| 158 |
501 |
1,000 |
154,500 |
|
|
| 66 |
1,001 |
5,000 |
153,000 |
|
|
| 21 |
5,001 |
10,000 |
165,100 |
|
|
| 8 |
10,001 |
15,000 |
94,000 |
|
|
| 3 |
15,001 |
20,000 |
59,000 |
|
|
| 1 |
25,001 |
30,000 |
28,000 |
|
|
| 2 |
30,001 |
35,000 |
64,500 |
|
|
| 2 |
50,001 |
55,000 |
105,800 |
|
|
| 1 |
120,001 |
125,000 |
125,000 |
|
|
| 1 |
295,001 |
300,000 |
300,000 |
|
|
| 1 |
335.00 |
340,000 |
337,700 |
|
|
| 1 |
495,001 |
500,000 |
500,000 |
|
|
| 1 |
1,245,001 |
1,250,000 |
1,250,000 |
|
|
| 1 |
1,840,001 |
1,845,000 |
1,841,500 |
|
|
| 1 |
2,895,001 |
2,900,000 |
2,900,000 |
|
|
| ---------- |
|
---------- |
|
| 746 |
|
Total |
8,259,700 |
|
| ========== |
|
|
========== |
|
|
| Categories
of Shareholders |
|
| As
at 30 June 1998 |
|
|
| Categories |
|
No. of |
|
|
|
|
Shareholders |
Share held |
Percentage |
|
|
|
|
|
| Individuals |
|
731 |
866,700 |
10.4931 |
|
| Insurance
Companies |
|
1 |
337,700 |
4.0885 |
|
| Joint
Stock Companies |
|
6 |
4,257,800 |
51.5491 |
|
| Financial
Institutions |
|
6 |
2,296,500 |
27.8037 |
|
| Modaraba |
|
1 |
1,000 |
0.0121 |
|
| Foreign
Companies |
|
1 |
500,000 |
6.0535 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
746 |
8,259,700 |
100.000 |
|
|
|
========== |
========== |
========== |
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|
|
| Chairman's
Review |
|
|
| I
am pleased to present before you the seventh annual report of the company
together with the |
|
| audited
account for the year ended 30th June, 1998, |
|
|
| AN
OVERVIEW: |
|
| During
the past few years, our economy has been passing through a recessionary
phase. The present |
|
| government
is trying its best for the revival of economic activities, but it is facing
difficulties in |
|
| accomplishment
of its objectives. However, during the financial year 1997-98, the economic |
|
| indicators
showed a positive sign, but the overall industry remained stagnant. |
|
|
| The
decision of nuclear detonation was the major event of the year. It was
immediately followed by |
|
| sanctions
imposed on Pakistan, which resulted in further deterioration of an already
frail economy. |
|
| The
freeze of dollar accounts also had negative impact on the economic activities
and created an |
|
| atmosphere
of uncertainty in the country. The aftermath of the nuclear explosion was
worse on the |
|
| economy
in general and on the financial sector in particular. Your company was also
no exception |
|
| to it. |
|
|
| During
the year under review, your company faced some tough times and found it
difficult to |
|
| maintain
the growth, as achieved in previous years. The stagnancy in the economy had
its toll on |
|
| your
company as well, Due to a crises-like situation in the financial sector, it
was extremely difficult to |
|
| borrow
funds from various institutions. The financial institutions also increased
their lending rates on |
|
| one
hand and on the other hand, competition reduced the mark-up rate charged to
the quality |
|
| customers
by the leasing companies, thus reducing their margins and spreads. The
availability of |
|
| quality
customers also became scarce. The air of uncertainty that prevailed in the
country also made |
|
| the
leasing business very difficult. |
|
|
| REVIEW
OF OPERATIONS: |
|
| The
business of your company was affected by the overall economic situation of
the country. |
|
| However,
your company managed to survive in these difficult time. Limited leases were
written during |
|
| the
period due to scarcity of funds and quality/credit worthy customers.
Therefore, company ~~~~~ |
|
| adopted
the policy of consolidation, While disbursing the funds, the main objective
of maintaining |
|
| quality
and well diversified lease portfolio remained in the forefront. During the
year, the emphasis |
|
| was
placed on leasing of commercial vehicles, as it provides an edge to the
company due to its |
|
| back-ground
and also commercial vehicles provide additional initial depreciation compared
with |
|
| other
assets, which helps the company in determent of tax liability. |
|
|
| As
on 30th June, 1998, company's lease portfolio amounted to Rs. 512.914
million, out of which |
|
| maximum
outstanding exposure is in the cement sector, which is Rs. 107.345 million or
19.93% followed |
|
| by
textile and transport & communication, amounting to Rs. 84.747 million
and Rs. 65.362 million or |
|
| 15.74%
and 12.14% respectively. The composition of the portfolio constituted 73.81%
in Machinery, |
|
| 13.49%
in commercial Vehicles, 7.04% in equipment and 5.67% in Private Vehicles. The
disbursement |
|
| followed
the pattern of 56.96% in Machinery, 9.20% in Equipment, 25,05% in commercial
Vehicles |
|
| and
8.79% in Private Vehicles. |
|
|
| Recovery
was one of the main concerns of the company, as due to overall stagnation, a
number of |
|
| clients
started delaying their rentals, The company also filed cases against a few
such clients. |
|
| However,
with the timely interference of management and strenuous efforts, recovery
position came |
|
| into
control. |
|
|
| Your
company incurred a loss of Rs. 24.588 million during the year as against Rs.
11,759 million profit |
|
| last
year, The loss has been primarily caused due to certain extraordinary
adjustments aggregating to |
|
| Rs.
28.721 million, which have been incorporated in these accounts in view of
general economic |
|
| conditions
and stock market crises. So as to follow a conservative and prudent approach
in the |
|
| interest
of shareholders despite the firm belief by the management that these
adjustments would |
|
| eventually
reverse and the amounts would be realised. The adjustments were as follows: |
|
|
|
|
|
|
(Rs. in million) |
|
|
|
|
|
|
| 1. Provision
in diminution of long term investments to |
7,760 |
|
| bring
them at market value although diminution is considered |
|
| by
management as temporary. |
|
|
|
| 2. Provision for
doubtful debts in addition to NBFI |
6,456 |
|
| Regulations
for a client in textile sector. |
|
|
|
| 3.
Non-recognition of lease rentals of certain |
|
14,505 |
|
| customers
in cement sector. |
|
---------- |
|
|
|
28,721 |
|
|
|
========== |
|
|
| In
case the above items were not considered, the profit for the year would have
been Rs. 4.133 |
|
| million. |
|
|
| The
major expenses incurred were financial charges and Admin & Operating
expenses, Financial |
|
| charges
stood at Rs. 72.709 million, which increased by 7.97% over the previous year.
The increase is |
|
| mainly
attributed to increase in mark up rates charged by the financial
institutions. Administrative and |
|
| Operating
Expenses amount to Rs. 25.676 million, which also includes separation
benefits for the |
|
| Ex-chairman
and Chief-Executive Officer, expenditure on COIs and the legal matters for
filling of |
|
| cases
against the lessees for recovery of lease rentals. |
|
|
| The
term of directors also expired on 27th June, 1998 and fresh elections were
held on 27th June, |
|
| 1998.
In the election, besides Ghandhara, following nominees of Marubenii
corporation of Japan |
|
| National
Investment Trust and Investment corporation of Pakistan were elected. |
|
|
| Mr.
Michio Kuwahara |
|
Nominee Marubeni |
|
| Mr.
Razi-ur-Rahman Khan |
Nominee NIT |
|
| Mr.
Nasim Beg |
|
Nominee NIT |
|
| Mr.
A. G. Budhani |
|
Nominee ICP |
|
|
| As
mentioned in the last annual report, that your company has been approved in
the credit line |
|
| financial
Sector Intermediation Loan (FSIL) of ADB. During the period, your company
forwarded three |
|
| proposals
for reimbursement, out of which one has already been approved and other two
are under |
|
| process.
However, later this year, i.e. on 30th September, 1998. ADB suspended its
credit line before |
|
| date
and would entertain proposals received upto 30th September, 1998. |
|
|
| FUTURE
PROSPECTS. |
|
| Considering
the overall economic situation, the year ahead, appears to be a difficult one
for the |
|
| country
in general and leasing sector in particular, Trend of consolidation would
continue in the year |
|
| to
come in almost all the sectors of the economy and your company will not be an
exception. |
|
| However,
the company will continue to provide lease financing to quality customers and
specially to |
|
| the
commercial vehicle segment of the market. |
|
|
| STAFF: |
|
| I
would like to appreciate the efforts, hard work and dedication of the
management and all the staff |
|
| members.
which they have extended in the operations of the company even in a difficult
and |
|
| challenging
year. |
|
|
| ACKNOWLEDGMENT: |
|
| I
would like to extend my gratitude toward Regulatory Authorities, DFIs, banks
and investment banks |
|
| for
extending their full cooperation and guidance to the company. |
|
|
|
|
RAZA KULI KHAN KHATTAK |
|
|
|
CHAIRMAN |
|
|
|
|
| Directors'
Report |
|
|
| The
directors have pleasure in submitting the Seventh Annual Report together with
Audited Accounts |
|
| and
the Auditors' Report thereon for year ended 30 June, 1998, |
|
|
| FINANCIAL
RESULTS |
|
|
|
30th June |
30th June |
|
|
|
|
|
1998 |
1997 |
|
|
|
|
| Total
Income |
|
|
|
92,169,383 |
9,982,621 |
|
| Expenses |
|
|
|
114,006,075 |
87,567,614 |
|
|
|
|
|
---------- |
---------- |
|
| Net
(Loss)/Profit before tax |
|
|
(21,836,692) |
12,258,597 |
|
| Taxation |
|
|
|
2,751,715 |
499,131 |
|
|
|
|
|
---------- |
---------- |
|
| (Loss)/Profit
after taxation |
|
|
(24,588,407) |
11,759,466 |
|
| Profit
brought forward |
|
|
|
17,013,682 |
8,146,868 |
|
|
|
|
|
---------- |
---------- |
|
| (Loss)/Profit
available for appropriation |
|
(7,574,725) |
19,906,334 |
|
| Appropriations |
|
|
|
|
|
| Transfer
to statutory reserve |
|
|
- |
2,351,893 |
|
| Transfer
to contingency reserve |
|
|
21,771 |
540,759 |
|
| Dividend
- Nil |
|
|
|
- |
- |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
21,771 |
2,892,652 |
|
|
|
|
|
---------- |
---------- |
|
| Unappropriated
(Loss)/Profit |
|
|
(7,552,954) |
17,013,682 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| AUDITOR'S |
|
| The
present Auditors Messrs. Taseer Hadi Khalid & Co,, Chartered Accountants,
retire and being |
|
| eligible
offer themselves for re-appointment, |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding is annexed. |
|
|
| STAFF |
|
| The
directors would like to place on record their appreciation of the hard work
and dedication of |
|
| staff
members in achieving the results being presented. |
|
|
| For
and on behalf of the Board. |
|
|
|
Haroon A. Zuberi |
|
Raza Kuli Khan Khattak |
|
|
Chief Executive |
|
Chairman |
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of Ghandara Leasing Company Limited
(Formerly |
|
| Ghemni
Leasing Company Limited) as at 30 June 1998 and the related profit and loss
account and |
|
| statement
of changes in financial position, together with the notes forming part
thereof, for the year |
|
| then
ended and we state that we have obtained all the information and explanations
which to the |
|
| best
of our knowledge and belief were necessary for the purposes of our audit and
after due |
|
| verification
thereof, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the company as
required by the |
|
| Companies
Ordinance, 1984; |
|
|
| (b)
in our opinion: |
|
|
| (i)
the balance sheet and profit and loss account together with the notes thereon
have been |
|
| drawn
up in conformity with the Companies Ordinance, 1984 and are in agreement with |
|
| the
books of account and are further in accordance with accounting policies
consistently |
|
| applied; |
|
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year |
|
| were
in accordance with the objects of the Company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, |
|
| the
balance sheet, profit and loss account and the statement of changes in
financial position, |
|
| together
with the notes forming part thereof, give the information required by the
Companies |
|
| Ordinance,
1984 in the manner so required and respectively give a true and fair view of
the |
|
| state
of the Company's affairs as at 30 June 1998 and of the Loss and the changes
in financial |
|
| position
for the year then ended; and |
|
|
| (d)
in our opinion Zakat deductible at source under the Zakat and Ushr Ordinance,
1980, was |
|
| deducted
by the Company and deposited in the Central Zakat Fund established under
section |
|
| 7
of that Ordinance, |
|
|
|
|
|
TASEER HADI KHALID & CO. |
|
| Karachi:
l0th December, 1998 |
|
CHARTERED ACCOUNTANTS |
|
|
|
|
|
| Balance
Sheet as at 30 June, 1998 |
|
|
|
|
NOTE |
1998 |
1997 |
|
| ASSETS |
|
|
|
|
|
|
| OPERATING
FIXED ASSETS - At cost less |
|
|
| accumulated depreciation |
|
3 |
7,122,415 |
6,673,072 |
|
| LONG TERM DEPOSITS |
|
|
|
230,922 |
247,922 |
|
| LONG
TERM INVESTMENTS |
|
4 |
4,176,036 |
11,935,759 |
|
| NET
INVESTMENT IN LEASE FINANCE - Secured |
5 |
267,815,746 |
326,698,202 |
|
| ADVANCE
AGAINST LEASE COMMITMENTS - Unsecured |
|
7,529,750 |
7,019,470 |
|
| DEFERRED
COST |
|
6 |
948,461 |
1,422,701 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| current
maturity of net investment in leases Finance and |
|
| overdue
lease rentals |
|
7 |
270,743,447 |
200,221,702 |
|
| Federal
investment Bonds |
|
8 |
50,000 |
50,000 |
|
| Shot
Term Advances - Secured |
|
9 |
41,162,413 |
- |
|
| Advances, deposits, prepayments
and |
|
|
| other
receivables |
|
10 |
12,469,915 |
15,737,777 |
|
| Cash
and Bank balances |
|
11 |
422,628 |
61,288,308] |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
324,848,403 |
277,297,787 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
612,671,733 |
631,294,913 |
|
|
|
========== |
========== |
|
|
|
|
| EQUITY
AND LIABILITIES |
|
|
|
|
|
|
| SHARE
CAPITAL |
|
12 |
82,597,000 |
82,597,000 |
|
| SHARE
PREMIUM |
|
|
48,895,500 |
48,895,500 |
|
| RESERVES |
|
13 |
24,002,942 |
24,024,713 |
|
| (ACCUMULATED
LOSS)/UNAPPROPRIATED PROFIT |
|
(7,552,954) |
17,013,682 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
|
|
|
147,942,488 |
172,530,895 |
|
| LONG
TERM FINANCES - Secured |
|
14 |
70,467,595 |
141,946,361 |
|
| CERTIFICATES
OF INVESTMENT |
|
15 |
24,815,250 |
40,260,000 |
|
| LONG
TERM DEPOSITS |
|
16 |
52,747,235 |
56,580,431 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
maturity of long term finances |
|
39,719,723 |
117,830,614 |
|
| Current
maturity of long term deposits |
|
25,257,752 |
15,878,544 |
|
| Certificates
of Investment |
|
15 & 17 |
141,531,740 |
25,325,000 |
|
| Short
term finances - Secured |
|
18 |
63,584,368 |
39,415,458 |
|
| Short
term finances - Unsecured |
|
19 |
23,000,000 |
7,000,000 |
|
| Accrued
expenses and other liabilities |
20 |
19,683,038 |
13,311,616 |
|
| Provision
for taxation |
|
|
3,459,669 |
707,954 |
|
| Unclaimed
Dividend |
|
|
462,875 |
508,040 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
316,699,165 |
219,977,226 |
|
| COMMITMENTS |
